Q: My company has filed for bankruptcy. Will I lose my job?
A:
Yikes! Not necessarily. There are two types of business bankruptcies: Chapter 7 and Chapter 11. There is also personal bankruptcies (Chapter 7 or Chapter 13 for businesses that are not incorporated). There are a lot of details to each method, but the important information for you is that Chapter 11 (or Chapter 13) are "reorganizations" meaning that the business tries to continue, but cannot meet its financial obligations (this usually results in loan renegotiations). Most businesses (and bankruptcy law) favor going the reorganization route (for example Donald Trump has used reorganization 6 times). Reorganizations may shed jobs, but this not a guarantee one way or the other.
If a reorganization fails (like Sports Authority) OR the business owner decides it is better to simply close-up shop, a Chapter 7 filling occurs. A Chapter 7 bankruptcy is a total liquidation, meaning that at the end of the bankruptcy the business will cease to exist. If this occurs, you will eventually lose your job because at the end the business will cease to exist.
Timothy Canty agrees with this answer
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